Fed tapering remains "largely a nonevent" for bullion prices
After weekly U.S. jobless claims rose to their highest level since July 19, gold jumped near $1,380 early Thursday, continuing to shake off the implications of the Federal Reserve's July minutes, released Wednesday, which confirmed possible tapering in September."You would expect that after the minutes, the gold price would be slightly lower, but this is not what is happening," Credit Suisse analyst Karim Cherif marveled.
Positive Chinese manufacturing data also boosted gold's appeal before it lost some steam and finished lower but still in positive territory. As for the world top gold-consuming nation along with China, HSBC analysts noted: "We expect physical buying in India to pick up later in the year ahead of the festive Diwali holiday," they wrote, referring to the five-day Hindu Festival of Lights, which begins this year on Nov. 3.
Renewed labor unrest in South Africa, the world's topplatinum producer and a major supplier of palladium, sentplatinum group metals prices sharply higher.
"The Fed minutes were largely a nonevent for gold, but the metal experienced a fairly significant sell-off in the Globexaftermarket [electronic trading], and in overnight trading in Asia," Gold Newsletter editor Brien Lundin toldMarketWatch. "The slide was halted, and eliminated, as the flash HSBC Purchasing Managers' Index for China came in very positively. The flash reading indicates that China's economy is growing faster than the consensus had been expecting, and this is bullish for gold and other commodities."
"Be patient" on tapering, Boston banker urges
As for tapering, the head of the Boston Fed told The Wall Street Journal that any pullback in its $85 billion-per-month asset purchase program should be limited. "If you're very uncertain about how strong the improvement in the economy is, and how self-sustaining, then you should move in fairly small increments," Eric Rosengren said. "This is a good time to be patient and very watchful."
And as EverBank exec Chuck Butler reminded TheStreet, investors shouldn't confuse tapering QE with ending QE. "Whenever we talk about tapering, everyone seems to believe that that means it's the end. Well, it's not the end. It's just that it's going to be lowered. So instead of buying $85 billion of bonds every month, they might buy $65 billion for a couple of months … As long as the markets get a feel for that, I think that gold will remain a viable investment opportunity. … There's still a lot of uncertainty in the world. … It will remain well bid during this taperng."
Computer glitch shutter Nasdaq
Meanwhile, a computer breakdown shook the stock market again today as malfunctioning software forced the Nasdaq to halt trading in thousands of stocks and options. All the major indexes finished up, but the glitch serves as a reminder why investors should maintain a physical-gold allocation, storing the metal securely where they can access it when they need it. Your digitized assets on a dark computer screen aren't going to help you in a pinch, but some gold and silver coins as well as some hard cash just might.
The disruption came just two days after options markets were roiled by mistaken trades sent by Goldman Sachs Group Inc. The recent rash of computer malfunctionshave raised questions about the reliability of electronic markets.
Could gold rout finally be "bottoming"?
And in a fresh sign that sentiment in the gold market is turning around, Bloomberg on Thursday published an articleheadlined: "Gold rout seen bottoming by analysts as China buys."
According to the article: "The rout in gold that wiped out $56 billion of value this year is spurring consumer demand in China and India, the biggest buyers, and leading JPMorgan Chase & Co. and Bank of America Corp. to say prices are bottoming.
"Sales of jewelry, coins and bars will reach as much as 1,000 metric tons in India and China in 2013, valued at a combined $87.6 billion, the World Gold Council estimates. Prices will average $1,300 an ounce in the fourth quarter, or 4.6 percent less than now, the median of 17 analyst estimates compiled by Bloomberg shows. Bank of America is the most bullish, predicting a fourth-quarter average of $1,495, and JPMorgan anticipates rising averages in every quarter through the end of next year."
Japanese gold retailer offers silver option
And in Japan, where the massive quantitative easing launched as a part of "Abenomics" has some investors seeking alternatives, its biggest gold retailer, Tanaka Kikinzoku Kogyo K.K., "will add silver to its online trading products for individual investors as prices trade near a three-month high."
"Silver is cheaper than gold and platinum and it can be bought with less money," said Kate Harada, general manager atTanaka Kikinzoku's precious metals team. "Individual investors have been searching for a tool to hedge their yen-based assets."
And in a country struggling with a major nuclear disaster atFukushima, silver's green-energy applications could make it a go-to metal there. "Japan may add the most solar capacity in the world this year, according to estimates by Bloomberg New Energy Finance. Solar panels accounted for 6.9% of the industrial demand for silver in 2011, according to CPM Group Inc."
More information can be found online at http://www.goldbullionadvisors.com
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